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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
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Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 333-73996
MORGAN GROUP HOLDING CO.
(Exact name of small business issuing as specified in its charter)
Delaware ______ 13-4196940_____
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(State or other jurisdiction of (IRS Employer Incorporation
of organization) Identification Number)
401 Theodore Fremd Avenue, Rye, New York 10580______
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(Address of principal executive offices) (Zip Code)
_____________________________________(914) 921-1877_____________________________
Insurer's telephone number, including area code
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date.
Class Outstanding at July 31, 2005
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Common Stock, $.01 par value 3,055,345
Transitional Small Business Disclosure Format (Check One): Yes ( ) No ( X )
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Supplementary Data.
Financial Statements Unaudited
Balance Sheets as of
June 30, 2005, December 31, 2004 and June 30, 2004
Statements of Operations for the
Three and Six Months Ended June 30, 2005 and 2004
Statements of Cash Flows for the
Six Months Ended June 30, 2005 and 2004
Notes to Financial
Statements as of June 30, 2005
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Morgan Group Holding Co.
Balance Sheets
(Unaudited)
(Dollars in thousands)
June 30, December 31, June 30,
------- ----------- --------
2005 2004 2004
------ ---------- -------
ASSETS
Current assets:
Cash and cash equivalents ..................... $ 403 $ 401 $ 400
Accounts receivable ........................... 1 -- --
------- ------- -------
Total curent assets ........................ 404 401 400
Net assets of The Morgan Group, Inc. .......... -- -- --
------- ------- -------
Total assets ............................... $ 404 $ 401 $ 400
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accrued expenses .............................. $ 1 $ -- $ --
------- ------- -------
Total current liabilities .................. -- -- --
SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value,
1,000,000 shares authorized,
none outstanding ............................ -- -- --
Common stock, $0.01 par value,
10,000,000 shares authorized,
3,055,345 outstanding ....................... 30 30 30
Additional paid-in-capital .................... 5,612 5,612 5,612
Accumulated deficit ........................... (5,239) (5,241) (5,242)
------- ------- -------
Total shareholders' equity ................. 403 401 400
------- ------- -------
Total liabilities and shareholders' equity . $ 404 $ 401 $ 400
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See accompanying notes to financial statements
3
Morgan Group Holding Co.
Statements of Operations
(Unaudited)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------- -------
2005 2004 2005 2004
------ ------ ------ -----
Administrative expenses .................. $-- $-- $ (2) $ (1)
Investment income ........................ 2 1 4 2
------- ------ ------- ------
Net profit .............................. $ 2 $ 1 $ 2 $ 1
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Basic and diluted net profit per share ... $0.00 $0.00 $0.00 $0.00
======= ======= ======= ======
Weighted average shares
outstanding - in thousands ............ 3,055 3,055 3,055 3,055
See accompanying notes to financial statements
4
Morgan Group Holding Co.
Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Six Months Ended
-----
June 30,
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2005 2004
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Operating activities:
Net profit (loss) ....................................... $ 2 $ 1
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase in accounts receivable ....................... (1) --
Increase in accrued expenses .......................... 1 --
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Net cash used in operating activities ................... 2 1
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Net change in cash and equivalents ........................ -- --
Cash and cash equivalents at beginning of period ............... 401 399
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Cash and cash equivalents at end of period .............. $ 403 $ 400
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See accompanying notes to financial statements
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Morgan Group Holding Co.
Notes to Financial Statements
Note 1. Basis of Presentation
Morgan Group Holding Co. ("Holding" or "the Company") was incorporated
in November 2001 as a wholly-owned subsidiary of Lynch Interactive
Corporation ("Interactive") to serve, among other business purposes, as
a holding company for Interactive's controlling interest in The Morgan
Group, Inc. ("Morgan"). On December 18, 2001, Interactive's controlling
interest in Morgan was transferred to Holding. At the time, Holding
owned 68.5% of Morgan's equity interest and 80.8% of Morgan's voting
interest. On January 24, 2002, Interactive spun off 2,820,051 shares of
the Company's common stock through a pro rata distribution ("Spin-Off")
to its stockholders. Interactive retained 235,294 shares of the
Company's common stock to be distributed in connection with the
potential conversion of a convertible note that had been issued by
Interactive. Such note was repurchased by Interactive in 2002 and
Interactive retains the shares.
On October 3, 2002, Morgan ceased its operations when its liability
insurance expired and it was unable to secure replacement insurance. On
October 18, 2002, Morgan and two of its operating subsidiaries filed
voluntary petitions under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the Northern District of
Indiana, South Bend Division for the purpose of conducting an orderly
liquidation of Morgan's assets.
As Morgan has ceased operations and is in the process liquidating
itself, in the accompanying balance sheet, the assets and liabilities
of Morgan have been reflected as one line. Holding's management
currently believes that it is very unlikely that Holding will realize
any value from its equity ownership in Morgan. Furthermore, Holding has
no obligation or intention to fund any of Morgan's liabilities,
therefore, Holding's investment in Morgan was believed to have no value
after the liquidation. As the liquidation of Morgan is under the
control of the bankruptcy court, Holding believes it has relinquished
control of Morgan and accordingly, has ceased consolidating the
financial statements of Morgan.
On October 18, 2002, Morgan adopted the liquidation basis of accounting
and accordingly, Morgan's assets and liabilities have been adjusted to
estimate net realizable value. As the carry value of Morgan's
liabilities exceeded the fair value of its assets, the liabilities were
reduced to equal the estimated net realizable value of the assets.
All highly liquid investments with maturity of three months or less
when purchased are considered to be cash equivalents. The carrying
value of cash equivalents approximates its fair value based on its
nature.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
with the instructions to Form 10-QSB and Articles 10 and 11 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in
the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three and six months ended June 30, 2005 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2005. The preparation of consolidated
financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that effect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
these estimates.
Note 2. Net assets of Morgan Group
At June 30, 2005, December 31, 2004, and June 30, 2004, the estimated
value of Morgan's assets in liquidation were insufficient to satisfy
its estimated obligations.
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Note 3 . Income Taxes
No income tax benefit has been recorded in the accompanying financial
statements, as the realization of such losses, for income tax purposes,
is dependent upon the generation of future taxable income during the
period when such losses would be deductible. Therefore, the recording
of the deferred tax asset of $1.5 million would be inconsistent with
applicable accounting rules.
Note 4. Commitments and Contingencies
Holding has not guaranteed any of the obligations of Morgan and it has
no further commitment or obligation to fund any creditors.
Note 5. Financial Statements not reviewed by Independent Public Accountants
On May 2, 2003, the client-auditor relationship between Holding and
Ernst & Young LLP ceased. As a result, these interim financial
statements have not been reviewed by independent public accountants.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's Discussion and Analysis of Financial Condition
and Plan of Operation.
Overview
On October 18, 2002, Morgan adopted the liquidation basis of accounting and
accordingly, Morgan's assets and liabilities have been adjusted to estimate net
realizable value. As the carrying value of Morgan's liabilities exceeded the
fair value of its assets, the liabilities were reduced to equal the estimated
net realizable value of the assets.
The Company currently has no operating businesses and will seek acquisitions as
part of its strategic alternatives. Its only costs are the administrative
expenses required to make the regulatory filings needed to maintain its public
status. These costs are estimated at $50,000 per year once a firm of independent
public accountants can be obtained.
Results of Operations
For the six months ended June 30, 2005, the Company incurred $2,000 of
administrative expenses as compared to $1,000 of expenses in the first six
months of 2004. For the three months ended June 30, 2005, no administrative
expenses were incurred, the same as the three months ended June 30, 2004.
Investment income was $4,000 in the first half of 2005 as compared to $2,000 in
the first quarter of 2004. $2,000 of investment income was recorded during the
three months ended June 30, 2005 as compared to $1,000 during the same period
last year.
Liquidity and Capital Resources
As of June 30, 2005, the Company's only assets consisted of $403,000 in cash and
an unrecognized asset relating to a tax loss carryforward, primarily capital, of
about $4 million.
Item 4. Controls and Procedures
As a result of the Bankruptcy, Morgan's corporate, financial and accounting
staff has been substantially reduced, thereby impairing the ability of Morgan to
maintain internal controls and adequate disclosure controls and procedures. On
November 12, 2002, Morgan filed a Form 15 with the Securities and Exchange
Commission to terminate its registration under Section 12(g) of the Exchange
Act. Given the current status of Morgan, neither the chief executive officer nor
the chief financial officer of Holding has been able to evaluate the
effectiveness of the disclosure controls and procedures of Morgan.
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Forward Looking Discussion
This report contains a number of forward-looking statements, including
statements regarding the prospective adequacy of the Company's liquidity and
capital resources in the near term. From time to time, the Company may make
other oral or written forward-looking statements regarding its anticipated
operating revenues, costs and expenses, earnings and other matters affecting its
operations and condition. Such forward-looking statements are subject to a
number of material factors, which could cause the statements or projections
contained therein, to be materially inaccurate. Such factors include the
estimated administrative expenses of the Company on a go forward basis.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) Current Report on Form 8-K filed on May 17, 2004, explaining
reason for not providing Rule 15d-14 and Section 906
certifications with Quarterly Report on Form 10-Q for the
period ending June 30, 2005.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MORGAN GROUP HOLDING CO.
By: /s/ Robert E. Dolan
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ROBERT E. DOLAN
Chief Financial Officer
August 10, 2005
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